As the clutch of internet companies grows bigger in the world’s second-most populous country, India’s market regulators are increasingly getting wary of the market turning into a duopoly or monopoly. In the recent past, India’s apex bank RBI and Competition Commission of India (CCI) have cautioned against the rise of internet companies.
On Thursday, CCI said it is stepping up its scrutiny of digital companies that have grown significantly, so much so that they now have the power to control their respective sectors. CCI has been quite active in investigating internet companies that are allegedly exploiting their dominant position in the market. Last month, it ordered a probe against Google for allegedly abusing its control of the smart TV operating system market. It is also investigating e-commerce giants Amazon India and Walmart-owned Flipkart allegedly for disrupting the level playing field.
“Markets in India are ripe with examples of single players or duopolies commanding significant market share. Even if these platforms do not exhibit all the characteristics of an essential facility, the essentiality of such platforms cannot be ignored,” said Ashok Kumar Gupta, chairman of CCI.
During his speech at a virtual event, Gupta spoke about how multi-players such as sellers, consumers, advertising, and application developers depend on these internet companies to survive. “The relationship of multiple actors in the ecosystem with these platforms has been increasingly raising competition concerns.”
It is to be noted that since 2017, the Confederation of All Indian Traders (CAIT), which represents 80 million offline sellers, has been waging war against Amazon and Flipkart allegedly for anti-competitive practices. In 2019, CAIT approached CCI to probe the business practices of Amazon and Flipkart. Since then, both companies have been trying to avoid the investigation and challenged the probe multiple times in court. However, the court has asked CCI to look into the matter. In the meantime, CAIT is set to launch its own e-commerce portal in August to compete with the two incumbents.
Earlier this month, the National Restaurants Association of India, an industry body that represents over 50,000 restaurants in the country, submitted detailed information to CCI on the business practices of Swiggy and Zomato that are allegedly hurting food establishments.
Gupta cautioned that companies that hold controlling powers in their respective sectors could create a situation where they might start collecting rent from even their trading partners. He underscored the need to implement competition laws to create a balance that incentivizes innovation without tipping the balance.